Earlier this year, there was an avalanche of bearish news surrounding the state of the solar industry.
I recall reading more than a dozen stories one day about how cuts in European feed-in tariffs were going to kill the solar industry.
And I can assure you, I got my fair share of e-mails from colleagues and analysts who were convinced I had lost my mind for maintaining my bullish stance on solar while so many others were bashing the industry…
Now I fully admit, we hit some rough spots back in May.
But I was not willing to relent; because I knew that despite all the negative press, strong European demand and continued Chinese support would give the solar market a strong boost around the second half of 2010 — particularly Chinese stocks.
If you’ve been following the solar space lately, you know how that worked out.
Take a look at some of the top Chinese solar stocks over the past five months:
Of course, I’m not suggesting you run out and chase these things now…
In fact there aren’t many big solar players that I’d be in a rush to buy today. Rest assured, a correction is coming.
But that doesn’t mean we’re turning our backs on solar, either.
Even with the U.S. falling behind the rest of the world when it comes to embracing a new energy economy, solar momentum is still strong.
China sure as hell ain’t balking. European demand isn’t falling nearly as much as the fear mongers told us it would earlier this year, and emerging markets in Asia are starting to see some real growth in solar manufacturing.
In fact last week we learned that First Solar (NASDAQ: FSLR) would be building a new 500 MW plant in Vietnam — following in the footsteps of Intel Corp. (NASDAQ: INTC), which will open its $1 billion chip assembly and testing facility this month.
Overall, we remain bullish on solar over the long term.
And while some of the bigger solar names are likely to shake out soon, there are still a few under-the-radar plays that will soon be ripe for the picking.
Triple-digit gains while no one’s paying attention
One of our earliest winners in the solar market was a tiny, under-the-radar company called XsunX, Inc. (OTCBB: XSNX). We recommended that company back in October 2005 at $0.37 a share; we sold it about five months later at $2.39 for a 545% gain.
Another under-the-radar solar stock that really paid off for us was a company called World Water and Power Corporation (OTCBB: WWAT) (now called Entech, Inc.).
We picked that one up for about $0.30 a share in 2005. By the time summer rolled around in 2007, the stock was trading well over $2.00 a share — giving those who cashed out on that run a gain of more than 560%.
Both of these companies were not major players. They were small, unheard-of stocks that few on Wall Street even knew about — which, I must admit, made me like them even more.
I won’t lie; I love staking my claim early to a no-name stock, only to watch the trend-chasers come along a year later and launch it into the stratosphere.
And that’s exactly what we did with those two stocks.
It’s also what we’re about to do again with another round of under-the-radar solar plays.
Our next solar winner
It’s not hard to do a little digging on a solar manufacturer these days.
There continues to be consolidation, and really, it’s only the major players that are delivering for investors. At this point in the game, there’s no way a small, underfunded solar cell or panel manufacturer will ever be able to catch up with companies like JA Solar (NASDAQ: JASO), Trina Solar (NYSE: TSL) or First Solar (NASDAQ: FSLR).
And if any of these small players happen to have superior technology, they’ll simply be gobbled up by the big boys.
Just ask GE (NYSE:GE), Siemens (NYSE: SI) or Sharp (SHCAY.PK). These behemoths have been on cleantech buying sprees for some time now.
However, you don’t have to chase a solar panel or cell manufacturer to make money in the solar game…
In fact some of the biggest gains we’ve witnessed this year have been from engineering firms and components manufacturers.
Heck just look at SatCon Technology Corporation (NASDAQ:SATC). This little inverter company has done quite well by hitching its trailer to the solar machine.
A year ago, that stock was trading at around $1.80. Today, it’s going for over $4.00 a share. You can’t complain about a 122% gain!
And there are plenty more to come…
In fact there’s a little publicly-traded tech firm I’m investigating right now that I think could make that SatCon gain look like peanuts.
It’s a small cleantech company that’s developed a way to increase the efficiencies of solar while drastically reducing installation costs.
I have a meeting with a friend of mine next week. He’s an engineer, and he says this technology is the real deal.
If what he says does in fact add up — and the company’s technology is legitimate — I’ll be telling you all about it next week.
To a new way of life, and a new generation of wealth…
Jeff
